African Swine Fever (ASF) has reached epidemic levels across Asia. Currently 11 Asian countries have confirmed ASF cases. The threat of ASF breaking in more Asian countries continues, especially given the ease at which the disease jumped across southeast Asia in recent weeks into East Timor, which is a neighbouring territory to Australia.
The expectation is that Indonesia and Thailand will be the next countries to confirm ASF. It should also be noted that the disease is also a significant risk to the European pigmeat industry.
To date, outbreaks have occurred in Bulgaria, Romania, Slovakia, Poland, Czech Republic and Belgium, to name a few, particularly in the wild boar population.
Why ASF has spread so rapidly in Asia
One of the main reasons ASF has spread across Asia is the nature of pigmeat production. In general, producers in farming regions across Asia tend to have relatively small holdings, but farm biosecurity systems did not help, transport bans were not implemented in time, and producers have an enormous reliance on swill feeding.
These are not the only reasons why the disease has spread so quickly. For example, serious under reporting of the disease has taken place on the back of policies for certain Chinese provinces to try to remain as disease free (officially) as possible, and in many cases, the compensation available to pig producers does not cover the cost of production.
Structural change
Given the ease with which this disease spreads, there will likely be a radical change in the structure of pigmeat production in the affected countries.
In 2003, around 73% of Chinese pigmeat producers held fewer than 50 pigs in their herd. It is projected by GIRA that by 2025, only 1% of producers will have a holding of 50 head or fewer, as around 47% of pigmeat producers will have holdings larger than 10,000 head.
Of course, this is a pattern that is very familiar in Ireland. It was common practice in Ireland for even urban families to keep a few pigs in the back yard, and is no doubt still a part of farming life today.
Pigmeat production shock
Until 2018, Chinese pigmeat production generally ran at around 54m tonnes per annum, which accounted for around 47% of global production. Since ASF was confirmed in August 2018, there has been widespread culling within herds, and this is expected to leave production 18m and 6m tonnes lower in 2019 and 2020 respectively (Figure 1). This would leave Chinese pigmeat production 45% lower at 30m tonnes in the space of two years. To put this pigmeat supply shock in perspective, it would take Ireland 20 years to produce 24m tonnes, even when you combine all meat proteins (beef, pigmeat, poultry and sheepmeat).
In the first seven months of 2019, Chinese pigmeat imports have increased by 36% to 1m tonnes. (Figure 2). Another 1m tonnes is expected to be imported during the remainder of the year. This should leave total Chinese pigmeat and offal imports at record levels, at just over 3m tonnes for the year. In addition, given the deficit in pigmeat supplies, imports for other meat proteins should experience a significant increase as the years goes on.
Up until July of this year, beef, poultry and sheepmeat were running around 58%, 50% and 19% higher, respectively, compared to the same period last year.
The other key Southeast Asian countries affected, including the Philippines, Vietnam, Myanmar and South Korea, collectively produce 7.3m tonnes. It is anticipated that this output will fall by between 30-50% by 2021.
Chinese pigmeat prices in record territory
On the back of this supply shock, producer prices have exceeded record levels (Figure 3). The latest Chinese live pig price is 29.4RMB/kg. In deadweight terms, this works out at around 38RMB/kg or €4.87/kg. Since the beginning of the year, Chinese pig producer prices have doubled, with the greatest jump in pricing occurring through the backend of Q2 into Q3. The key reasons for this spike is related to a slowdown in culling as a result of ASF, combined with lower domestic stocks being available, which has helped support strong pigmeat import activity.
Mixed outlooks for global pigmeat suppliers
Access to the Chinese market is influencing pricing levels for key global pigmeat suppliers such as the US, Brazil and Canada. US suppliers are being hampered by the trade war, where additional tariffs of 72% are affecting competitiveness.
Canadian pigmeat exports have been suspended since July, due to paperwork irregularities. As a result, North American trade has been severely affected, with prices in the US and Canada currently at €0.94/kg and €1.04/kg deadweight, respectively.
Meanwhile, Brazilian prices over the last few weeks have gathered some momentum on the back of meat export plants securing additional market access to China, with prices now making €1.30/kg DW. Currently, only 6% of Chinese pigmeat imports originate in Brazil.
Bord Bia's Peter Duggan.
Given the brittle nature of some supplier relationships with China currently, it is vital that the EU maintains a strong trading relationship and remains ASF free in western Europe. For the first seven months of 2019, Irish pigmeat exports to China were around 43% higher at 47,000t compared to previous year levels. For the year, pigmeat exports to China should hit record levels at 80,000t. Irish pig producers are starting to see the benefit of this demand, with prices in September 27% higher than last year at €1.75/kg for S grade pigs compared with €1.38/kg in September 2018.
African Swine Fever (ASF) has reached epidemic levels across Asia. Currently 11 Asian countries have confirmed ASF cases. The threat of ASF breaking in more Asian countries continues, especially given the ease at which the disease jumped across southeast Asia in recent weeks into East Timor, which is a neighbouring territory to Australia.
The expectation is that Indonesia and Thailand will be the next countries to confirm ASF. It should also be noted that the disease is also a significant risk to the European pigmeat industry.
To date, outbreaks have occurred in Bulgaria, Romania, Slovakia, Poland, Czech Republic and Belgium, to name a few, particularly in the wild boar population.
Why ASF has spread so rapidly in Asia
One of the main reasons ASF has spread across Asia is the nature of pigmeat production. In general, producers in farming regions across Asia tend to have relatively small holdings, but farm biosecurity systems did not help, transport bans were not implemented in time, and producers have an enormous reliance on swill feeding.
These are not the only reasons why the disease has spread so quickly. For example, serious under reporting of the disease has taken place on the back of policies for certain Chinese provinces to try to remain as disease free (officially) as possible, and in many cases, the compensation available to pig producers does not cover the cost of production.
Structural change
Given the ease with which this disease spreads, there will likely be a radical change in the structure of pigmeat production in the affected countries.
In 2003, around 73% of Chinese pigmeat producers held fewer than 50 pigs in their herd. It is projected by GIRA that by 2025, only 1% of producers will have a holding of 50 head or fewer, as around 47% of pigmeat producers will have holdings larger than 10,000 head.
Of course, this is a pattern that is very familiar in Ireland. It was common practice in Ireland for even urban families to keep a few pigs in the back yard, and is no doubt still a part of farming life today.
Pigmeat production shock
Until 2018, Chinese pigmeat production generally ran at around 54m tonnes per annum, which accounted for around 47% of global production. Since ASF was confirmed in August 2018, there has been widespread culling within herds, and this is expected to leave production 18m and 6m tonnes lower in 2019 and 2020 respectively (Figure 1). This would leave Chinese pigmeat production 45% lower at 30m tonnes in the space of two years. To put this pigmeat supply shock in perspective, it would take Ireland 20 years to produce 24m tonnes, even when you combine all meat proteins (beef, pigmeat, poultry and sheepmeat).
In the first seven months of 2019, Chinese pigmeat imports have increased by 36% to 1m tonnes. (Figure 2). Another 1m tonnes is expected to be imported during the remainder of the year. This should leave total Chinese pigmeat and offal imports at record levels, at just over 3m tonnes for the year. In addition, given the deficit in pigmeat supplies, imports for other meat proteins should experience a significant increase as the years goes on.
Up until July of this year, beef, poultry and sheepmeat were running around 58%, 50% and 19% higher, respectively, compared to the same period last year.
The other key Southeast Asian countries affected, including the Philippines, Vietnam, Myanmar and South Korea, collectively produce 7.3m tonnes. It is anticipated that this output will fall by between 30-50% by 2021.
Chinese pigmeat prices in record territory
On the back of this supply shock, producer prices have exceeded record levels (Figure 3). The latest Chinese live pig price is 29.4RMB/kg. In deadweight terms, this works out at around 38RMB/kg or €4.87/kg. Since the beginning of the year, Chinese pig producer prices have doubled, with the greatest jump in pricing occurring through the backend of Q2 into Q3. The key reasons for this spike is related to a slowdown in culling as a result of ASF, combined with lower domestic stocks being available, which has helped support strong pigmeat import activity.
Mixed outlooks for global pigmeat suppliers
Access to the Chinese market is influencing pricing levels for key global pigmeat suppliers such as the US, Brazil and Canada. US suppliers are being hampered by the trade war, where additional tariffs of 72% are affecting competitiveness.
Canadian pigmeat exports have been suspended since July, due to paperwork irregularities. As a result, North American trade has been severely affected, with prices in the US and Canada currently at €0.94/kg and €1.04/kg deadweight, respectively.
Meanwhile, Brazilian prices over the last few weeks have gathered some momentum on the back of meat export plants securing additional market access to China, with prices now making €1.30/kg DW. Currently, only 6% of Chinese pigmeat imports originate in Brazil.
Bord Bia's Peter Duggan.
Given the brittle nature of some supplier relationships with China currently, it is vital that the EU maintains a strong trading relationship and remains ASF free in western Europe. For the first seven months of 2019, Irish pigmeat exports to China were around 43% higher at 47,000t compared to previous year levels. For the year, pigmeat exports to China should hit record levels at 80,000t. Irish pig producers are starting to see the benefit of this demand, with prices in September 27% higher than last year at €1.75/kg for S grade pigs compared with €1.38/kg in September 2018.
SHARING OPTIONS